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Reversing the Ban on Nursing Home Arbitration Agreements
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Reversing the Ban on Nursing Home Arbitration Agreements

05.24.17

The hits keep coming to plaintiffs’ attorneys seeking to invalidate nursing home arbitration agreements. Last year, the plaintiffs’ bar could smell victory when the Centers for Medicare & Medicaid Services (CMS) announced its new rule banning arbitration clauses in nursing home admission contracts. But a victory lap was premature as CMS announced in January 2017 that it would delay enforcement of the rule, citing legal challenges to arbitration agreements, discussed at length here. For instance, a Mississippi federal court granted several healthcare groups’ request for an injunction barring implementation of the rule towards the end of 2016. The Trump administration has also shown little support for the rule and has signaled reductions in regulatory burdens on industry. Nursing home groups have long advocated that arbitration agreements are the only way to avoid costly litigation that threatens to close facilities necessary to communities.

Recent events make implementation of the rule even less likely. A few weeks ago, CMS submitted a proposal to revise the rule banning arbitration clauses in nursing home contracts. Recently, the White House Office of Management and Budget (OMB) met with long-term care groups and CMS to discuss the proposed rule revision. No word yet on what the revision will encompass, but during the meeting CMS seemed to be in favor of arbitration—an extreme reversal in course from the finalized rule that completely barred arbitration agreements. The OMB has 90 days to respond to the proposed rule revision submitted by CMS.

The United States Supreme Court issued yet another stunning blow to the plaintiffs’ bar on May 15, 2017, when it ruled that a nursing home can enforce arbitration agreements signed by persons with appropriate power of attorney over nursing home residents in the consolidated cases of Kindred Nursing Centers v. Clark et al., discussed at length here. Needless to say, the battle over the nursing home arbitration agreement is far from over and the plaintiffs’ bar is not likely to retreat from the recent regulatory and judicial setbacks. Expect to see more claims seeking to strike arbitration agreements based on the language of the power of attorney, the competency of nursing home residents at the time the power of attorney was executed, and novel arguments aimed at defeating Federal Arbitration Act preemption.



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